How to start a manufacturing business

Manufacturing may have the image of a dwindling industry in the UK but it still accounts for a sixth of the economy. Cheaper operating costs in other markets around the world have damaged this country's opportunities but as a hub for innovation and ideas, there is still plenty of room to succeed in the UK manufacturing industry.

If you've got a product idea and the required financial backing, starting-up a manufacturing business could be the exact route for you to take.

Day-to-day

As the head of a manufacturing business, the structure of your days will be decided by how involved with different strands of the business you are.

In the example of a small business, your time will be split between your involvement with the actual manufacturing of the product, and selling the completed version. You will have to act as an entrepreneur, manufacturer, PR and salesman simultaneously, unless you get so much financial backing so that you can afford to hire any of these.

In time, you may be able to completely hand over both the manufacturing and selling of your product to employees in order for you to take a more executive role but, in the early days of starting up, a lot of the earnest will be on you.

As with many businesses, the length of your day is up to you. However, while the manufacturing may be finished at a certain point, the research and efforts into creating sales and interest in your product will not be. Be prepared to succeed only on your own efforts.

Location

There are two separate parts of your location decision when starting up a manufacturing business. You need to know where your product will be made and where it will be sold.

While starting up, some manufacturing businesses may be able to operate out of your homes, but if you require specialist equipment of large spaces, you may have to find an external office. There will be space available all across the country but prices do vary. Look around and find the cheapest option, which fits your requirements. Don't get caught out by not having enough access to electricity or anything else you may need.

The question of where to sell your product is an easy one to answer. It would be foolish to limit yourself to regions or shops to sell from these days - take advantage of the internet and get a professional website to sell from as well as stores on eBay, Amazon and the other available online trading options.

Try to get your product into national and, if possible, international stores. This will require a lot of time to set up meetings and convince buyers of the profitability of your product, but will be a worthwhile venture and take a lot of the selling strain from your shoulders.

Natural skills

Starting-up a manufacturing business will require a huge investment of time, but on top of that you will need a variety of skills:

• A flair for innovation
• Confidence
• Willpower
• Interpersonal expertise
• The ability to multi-task
• An analytical mind and a good grasp of accounts
• Knowledge of your markets

Training

As a manufacturer, you will need to be able to efficiently create your product to the highest possible standard. Assuming you do not have the financial backing to pay others to manufacture your products from the outset you will need to find a way of learning how to reduce waste from your production and get the manufacturing process up and running as quickly as possible.

A lot of what you need to learn about starting up a manufacturing business will come from your first few attempts at each strand. Your production technique will change dramatically before you settle into a routine, your business planning skills will be developed through rewrites with a business manager and your sales pitches will never stop chnaging and improving.

Premises

The space you'll require depends entirely on what you are manufacturing. If your product is small, being made solely by yourself and needs little equipment to create, your house will suffice. However, if you need employed manufacturers or large equipment, there are ample choices for where to have your idea put together.

Ashtenne provide a great service for finding specific rentals based on your location, size and equipment requirements. You will have to contact them to find out prices, but you should expect to need high levels of financial backing to be able to utilise manufacturing space.

Staff

At a start-up level you may not need any staff. For this option, you will have to find investors, manufacture your product, sell it through one of many avenues and conduct research by yourself. It isn't an impossible task but it can be a daunting one.

If you feel you need it and it is possible in practical terms you could hire a selection of people to help you in your business. From business managers to manufacturers, freelance sales executives and market researchers, the options are there if you have the finances. Each of these will take some of the strain from your shoulders, but will also take some of the profits from your business.

Money

Manufacturing start-ups can require a huge amount of backing. You are unlikely to be able to proceed without a substantial bank loan or investment.

Make sure you include all possible costs in your business plan. From the manufacturing of the goods themselves, to their transportation costs, wages and money spent on advertising, if a prospective investor can spot a cost you haven't, it will be the end of the discussion.

First Steps

Create a list of all the reasons why the product you have in mind will succeed as a business and memorise them. There will be many points along the road to starting up when you will need to know the items on your list.

It is vital you write a thorough business plan. If you can't do this yourself, seek assistance. If there is one industry in which a good plan can make or break an investment meeting, it is manufacturing.

You must know your growth plan. You can't be short-sighted when starting up this business. You need to know how long it is until you will start making a profit and when you will need to hire staff, utilise a separate manufacturing space.

Decide on your sales avenues. This is discussed below, but there are a multitude of sales options available and you need to consider your target markets and the correct way to sell to them.

Read our feature, How to start a business: the ultimate checklist.

Selling

The selling of your product will be the most difficult and significant element of your start-up. You have to convince people why they need your product, and why they should spend money on it. This will be done through different routes.

Selling online

With the decline of retail shops in Britain and the copious options available, using the internet to sell your products should be the first choice of any entrepreneur. Personal websites and the multitude of digital retailers are all great options. The profits lost through this avenue are lower than from terms with shops and the only down side is the advertising of the product would fall back onto you.

Personal selling

Some people won't consider the option of door-to-door selling as viable these days and trying to sell a product over the phone may harm your business' name. However, if you are persuasive and looking for a low cost way to start picking up some sales, this tactic should not be disregarded and there will always be specialised events to sell at.

Selling through shops

You'll need a slick sales pitch to convince shops to stock your product, and you will lose a substantial proportion of your profits to them, but once they have accepted terms on what you are making, you can relax. If you are looking for a way to make sales without constantly having to get involved, this is definitely a good route to consider.

Tips

• Maintain regular and accurate costs list to stay completely in line with what your profit levels are.
• Put as much time and thought into your sales pitch as possible. While it is good to learn from each attempt at conveying why your product is worth an investment, and worth buying, it is better to get it right first time.
• Be prepared for this product to become the centre of your life. Opportunities to promote and sell what you are manufacturing will be abundant and not utilising them will see your sales suffer greatly.
• Investigate stock prices for your materials intensely and establish good relationships with suppliers to ensure you are getting the lowest costs possible.
• Learn how to negotiate. Individuals, investors and retailers will all be looking to get as much out of you as possible. Do not allow them to take any more of your profits than fits with your business plan.

Common pitfalls

Not considering how much of your time this will require

Starting-up a manufacturing business is a huge undertaking and must be treated as such. While research and development can be done in your spare time, if you are serious about your product, you will soon need to dedicate all of your time to it.

Not putting money back into the business

Once profits start to come in, it will be tempting to treat yourself for all your hard work and determination. However, you will need to leave enough money for the company to overcome any difficulties and expand in some quite expensive fashions.

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